How to potentially protect your business from the absence of a key person

Often in a business, there are key influencers and performers without whom the business would underperform or cease to exist. These drivers could include Managing Directors, Sales Directors or key developers of the business. Key Person Protection aims to allow you to remain in control if the worst should happen and a key person is lost to death or critical illness. Ask yourself, how would your business be affected if your Sales Director was off long-term with a critical illness? If you lost the figure at the helm who was driving forward would the team below know what is supposed to happen next? Would productivity be affected, would sales dry up and who would make the important decisions needed?

Key Person Protection aims to provide the breathing space needed to address all these questions by paying a lump sum to your business if the insured dies or is critically ill. It allows the business to continue trading in their absence and for a replacement person to be found and trained. It may take away cash flow worries and may ensure that any business loans and payments can still be paid. You may also find yourself in the situation where you need to purchase the deceased’s shares and this payment may give you the funds needed to do this. It all puts you in control of your business and allows normal trading to resume as much as possible. If you are the key person, then your team are put in the best place to make decisions without you and keep the business progressing in your absence.

You may also wish to document processes and share the information with the key leadership team so the correct business procedures are followed if you or another senior member is missing. Make sure that key data is available to all the leadership team and any logins are accessible if needed. Ensure job role documents are up-to-date helping to know what needs to be actioned if someone is absent.

Premiums can be paid for by the company, potentially helping with tax efficiency and aiming to remove the worry of being able to cope with the unforeseen absence of a key member. We always recommend that you take financial advice if you are considering any kind of protection so if you would like to know more, please contact us on 0333 456 0333.